IP TIPS and WATCH-OUTS in Indonesia

indonesiaIn this blog post, we will provide you with all the basics you need to successfully protect your Intellectual Property Rights in Indonesia. Known for its diverse and rapidly growing market, Indonesia provides opportunities for many European SMEs interested to expand their business into South-East Asia. This blog post will give a concise overview of IP tips and watch-outs for Indonesia – enjoy.

General IP TIPS and WATCH-OUTS in Indonesia

  • Indonesia recognises ‘well–known’ trade marks (recognition of this is made on a case-by-case basis), but only to the extent that they may be used to prevent a third party from registering a similar trade mark, at least in theory. Often, ‘bad-faith’ registrations (intentionally registering someone else’s pre-existing IP) get registered by third parties and the rightful owner has to go through the expensive process of filing proceedings in the commercial court to cancel these bad-faith registrations.
  • When the need arises to enforce rights through the authorities, it is best that IP rights owners be aware of recent media coverage of corruption cases in Indonesia. The fact that corruption cases have been surfaced demonstrates the government’s efforts at cleaning up corruption cases; however it is still worth discussing a potential corruption risk with your attorney when enforcing your rights via the authorities.
  • Because IP rights enforcement in Indonesia can still be problematic, it is essential to register your rights there in order to stand a chance of defending them. Intellectual Property Rights are territorial in nature, which means that registrations in one country’s jurisdiction are not automatically enforceable in others, and therefore registrations in multiple countries may be necessary, particularly for businesses looking to internationalise. Indonesia operates under a ‘first-to file’ system, meaning that the first person to file an IP right in the Indonesian jurisdiction will own that right once the application is granted.

Copyrights TIPS and WATCH-OUTS in Indonesia

  • Although there is no requirement to register copyright in order for the work to be protected, in the case of litigation, the enforcement authorities still need to be satisfied that the IP right holder making the prosecution is in fact the rightful owner, and they usually require the copyright registration to be produced for this purpose. Foreign copyright registration may suffice, however it can be problematic when the IP rights holder has not registered copyright in Indonesia. Therefore it is still advisable for European SMEs to register copyrights in Indonesia.
  • The copyrights for works created by an employee, even if in the course of employment; do not automatically belong to the employer. As such, the employment contract you choose to use for your employees should expressly address how ownership of new Intellectual property created will be assigned.

Patents TIPS and WATCH-OUTS in Indonesia

  • Most patent applications are granted based on corresponding applications of foreign grants, mainly because local examiners are still not equipped to undertake independent full search and examination yet. Such foreign grants should be from patent offices that are known to conduct independent examination, as this is rare practice in Indonesia. It is therefore useful to have in mind an overseas filing that you would eventually use to support the grant by the Indonesian office.
  • Judges are still often not familiar with patent matters and rely heavily on the Patent Office for opinion on matters of infringement and invalidation. Though not binding, results of overseas litigations on the same patent can still be useful in helping judges make a decision in Indonesia. This could be the reason why foreign patent holders are usually reluctant to litigate in Indonesia first, particularly in cases where the patent owner is facing the same adversary in several countries.
  • Patent specifications need to be translated into the local language and translation error is common, with translations often being too literal. This is compounded by the lack of procedures to correct such errors once a patent is granted. It is recommended that applicants pay special attention to the translation of the independent claims as this is the most important part of the document.
  • Patent searching is necessary for small businesses to understand if their new products would infringe on any valid and existing patents. Full searches are still not possible because patent records are not fully computerised. Searches can only be made into basic bibliographic data and abstracts of inventions, but not the complete specification.
  • In case of patent abandonment in Indonesia, the current Patent Law present a discrepancy in the provisions in relation to the payment of outstanding fees for abandonment. According to the Patent Law if within three consecutive years the annual fees have not been paid (‘grace period’), the patent shall be deemed void commencing from the date of the third year. Article 115 obliges patent holders to continue paying the annuities of the grace period through a backdated settlement and it is currently disputed if the outstanding payment becomes a debt that must be paid by patent holders to the Indonesian Directorate General of Intellectual Property Rights.
  • Industrial designs need to be new when the application is filed. Where a design has already been disclosed to the market through production and sales, some IP owners try to protect their designs as copyright. It is not clear whether using copyright is entirely defensible in this case, but a copyright registration could strengthen the legitimacy to the IP owner’s claim to rights in the design and could be considered as a possible strategy.

Trade Marks TIPS and WATCH-OUTS in Indonesia

  • Because of the bad-faith registration risk, you should consider registering your most important trade marks in Indonesia even before you commence business dealings there. Some bad-faith registrations are filed by the authorised distributors and problems usually arise when the rightful owner wishes to replace the existing distributor. One alternative would be to sign an agreement with the distributor in advance stating that he/she will not register the principal’s trade mark, although registering the trade mark yourself first is still the safest option.
  • The TMO effectively applies a first-to-file system, and oppositions against bad-faith registrations do not usually succeed. There is also no avenue for appeal by the opponent/ rightful owner if he loses, whereas the applicant can appeal to the appeal commission and then to the courts. In this case, the losing opponent/rightful owner will have to litigate in the commercial court to cancel the bad-faith registrations, and this process is expensive. It is therefore extremely important to register your trade mark as early as possible if doing business in Indonesia.
  • In case your trade mark is not used for three consecutive years from the registration date (or if it has been used only with goods or services other than those covered by the registration), the Directorate General of Intellectual Property Rights may delete your mark at its own discretion or any third party may submit a cancellation request through the Court of Commerce. In such circumstances, the burden of proof will be on the plaintiff to show that the mark has not been used.
  • Remember to file for renewal of your trade mark in Indonesia up to twelve months before expiry of the current registration period, but not after this period. If you don’t renew your trade mark registration within the prescribed period, the registration will be automatically recorded as lapsed.

Trade Secrets TIPS and WATCH-OUTS in Indonesia

  • In a trade secrets case it is necessary to prove that the trade secret has been taken by the suspected party. Proving this may be difficult because the litigation procedure is not equipped with a discovery procedure to uncover relevant evidence of the suspected party. It may help with the proof if you can prove that the local company used to have a relationship with the victim company OR was previously given access to the trade secret.
  • Companies should also proceed with caution when engaging investigators because the law accords certain privacy rights, and the infringers themselves could complain in a criminal case that their

IP Enforcement TIPS and WATCH-OUTS

  • In theory, if you are an IP rights owner, you can apply to court to suspend the customs clearance of a specific shipment of goods. However in practice these provisions are usually unworkable because it means that you need specific information on a suspected shipment, as well as supporting documentary evidence, in order to get the court to issue a court order to suspend the shipment. Also, generally speaking the courts are still not equipped to respond to time critical cases such as dealing with goods in transit.
  • Before raiding any target, it is advisable to investigate if the infringer is connected to any senior police officer or government official. If raided, the infringer might call on this connection to influence the negotiation.
  • Evidence preparation is essential when dealing with the Indonesian civil system in IP cases. Overseas evidence will need to be legalised to be admitted in the court proceeding.
  • Prosecution of infringers is rare because IP owners are not confident that the public prosecutor can secure a conviction with a meaningful punishment that matches the infringement. As such, they usually prefer to settle with the raided infringer out of court, in return for a signed settlement agreement with clauses obliging them not to infringe, to surrender possession of counterfeits, and where possible to issue a published apology.

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The South-East Asia IPR SME Helpdesk supports small and medium sized enterprises (SMEs) from European Union (EU) member states to protect and enforce their Intellectual Property Rights (IPR) in or relating to South-East Asian countries, through the provision of free information and services. The Helpdesk provides jargon-free, first-line, confidential advice on intellectual property and related issues, along with training events, materials and online resources. Individual SMEs and SME intermediaries can submit their IPR queries via email (question@southeastasia-iprhelpdesk.eu) and gain access to a panel of experts, in order to receive free and confidential first-line advice within 3 working days.

The South-East Asia IPR SME Helpdesk is co-funded by the European Union.

To learn more about the South-East Asia IPR SME Helpdesk and any aspect of intellectual property rights in South-East Asia, please visit our online portal at http://www.ipr-hub.eu/.


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